Trump backs Tesla amid stock slump, but consumer sentiment wavers

In the wake of one of the most significant single-day sell-offs in Tesla's history, former President Donald Trump has come out in support of his advisor, Elon Musk, vowing to purchase one of the billionaire's electric vehicles. This comes as Tesla continues to struggle in 2025, grappling with rising competition from Chinese electric vehicle (EV) manufacturers and the backlash tied to Musk’s controversial associations, particularly his ties to Trump and far-right movements globally.

Tesla's stock has been hit hard, plummeting 45% this year, with a steep 15% drop on Monday alone, bringing shares to $222.15—the lowest since October. This steep decline reflects increasing pessimism surrounding Tesla, as its global sales take a hit. In response, Trump took to Truth Social, where he expressed support for Musk, claiming that the CEO is “putting it on the line” to help the country. Trump also alleged that “Radical Left Lunatics” are attempting to “illegally and collusively boycott Tesla,” calling the company "one of the world’s great automakers" and emphasizing Musk’s commitment to his business.

Trump's comments had an immediate impact, causing Tesla’s stock to rebound slightly, rising more than 3% before the market opened on Tuesday.

Analysts, however, point to Musk's political affiliations as a key factor in Tesla's recent struggles. Musk's vocal support of Trump and other far-right candidates has not been well-received by some Tesla consumers, who are generally considered to be wealthier and more progressive. Tesla showrooms across the U.S. have become sites of protest, and some owners have resorted to placing bumper stickers on their vehicles reading “I bought it before Elon went nuts,” possibly in a bid to distance themselves from the controversy.

This shift in public perception has resulted in tangible consequences for Tesla. In addition to facing protests, the company has seen a decline in its sales figures. Tesla's sales dropped significantly in its home state of California, the company's largest U.S. market, and the company recorded its first-ever global sales decline last year. In Europe, Tesla sales plummeted by 45% in January, according to data from Jato Dynamics, with Germany and France experiencing the sharpest declines. Meanwhile, Tesla’s sales in China have nearly halved from the same time last year, primarily due to increasing competition from domestic EV manufacturers.

U.S. analysts at UBS Global Research project that Tesla deliveries will fall by 5% in the first quarter of 2025 compared to the previous year. Their research also indicates low delivery times for Tesla’s Model 3 and Model Y, which typically indicate weaker demand.

In addition to his political leanings, Musk's controversial support for various global far-right movements has further complicated Tesla's position. Musk has expressed admiration for the far-right pro-Russian party in Germany, criticized Canadian policies, and referred to the British prime minister as an “evil tyrant." These actions appear to have alienated some of Tesla’s core consumer base.

Tesla isn't the only Musk-led company encountering turbulence. His social media platform, X, suffered multiple outages on Monday, which Musk attributed to a “massive” cyberattack. The platform’s difficulties were compounded by Musk’s decision to reduce the workforce, leading to warnings about the platform's vulnerability. Furthermore, a rocket launch from Musk's SpaceX company exploded last week over Florida, marking yet another setback for the billionaire’s ventures.

As Tesla’s future continues to hang in the balance amid a challenging political and economic landscape, the coming months will likely reveal whether Musk’s political alignment and contentious decisions will continue to impact the company’s fortunes. Meanwhile, Trump’s public endorsement of Tesla may provide some short-term relief, but it remains uncertain whether it will be enough to restore the brand's image and stabilize its sales.